Get ready for the 2025 tax year because it’s coming with a lot of new things!
The Internal Revenue Service (IRS) has implemented some changes that will make some lucky people free from paying taxes.
Let’s go in order, now that tax season is approaching, you need to know whether or not you owe federal taxes, so stay and read, because this might interest you!
The IRS and its new updates
Every year, the IRS tries to adjust marginal tax rates to prevent taxpayers from falling into higher tax brackets, so the adjustments will be as follows:
- 10% for incomes up to $11,925 ($23,850 for married couples).
- 12% for incomes between $11,925 and $48,475 ($23,850 and $96,950 for couples).
- 22%, 24%, 32%, 35%, and 37% for higher incomes, as applicable.
As for standard deductions, they have also increased, so taxpayers will pay less taxes.
- Singles: $15,000 ($400 increase from 2024).
- Married couples: $30,000 ($800 increase).
- Heads of household: $22,500 ($600 increase).
Who will be exempt from paying these taxes?
You may know that there are taxes that you will not be able to avoid, such as the sales tax, but there are three categories of people and organizations that will be exempt from these federal taxes:
- Churches, hospitals, schools, and shelters that meet the criteria of the Internal Revenue Code and all non-profit organizations.
- Those Americans who live abroad permanently (Expatriates) and earn less than $130,000 a year.
- Medical expenses, mortgage interest or charitable donations will be largely deductible from the tax.
Are those the only changes?
No! 2025 brings more news, and that is that the inheritance tax (or estate tax credit) will have a basic exclusion amount of almost $14 million, and the annual exclusion for gifts will increase to $19,000 per person.
Other credits, such as tax credits for earned income, will be increased for those who have three or more children.
Table with all the tax changes for 2025:
To make everything clearer, we are going to outline the changes that will occur from the 2025 tax year.
Individual coverage Medical Savings Accounts will also be reduced by between $2,850 and $4,300 (increases of $50 and $150, respectively, from last year).
Tax Rates
- 10%: Up to $11,925 (individual) / $23,850 (couples).
- 12%: $11,926 – $48,475 (individual) / $23,851 – $96,950 (couples).
- 22%, 24%, 32%, 35%, 37%: Higher brackets based on income.
Standard Deductions
- Singles: $15,000.
- Married couples: $30,000.
- Head of household: $22,500.
- Tax Exempt
Non-profit organizations.
- Expatriates (income < $130,000).
- Filers with significant deductions (medical expenses, donations).
Tax Credits
- Earned Income (EITC): $8,046 (3+ children).
- Estate: $13,990,000 excluded.
- Donations: $19,000 per perso
Health Savings Accounts (HSA)
Individual:
- Deductible: $2,850 – $4,300.
- Maximum expense: $5,700.
Family:
- Deductible: $5,700 – $8,550.
- Maximum expense: $10,500.
What do I do if I have more tax questions?
It’s very simple, you can check the government website for these issues (clicking here will take you directly) or consult with a financial manager who will help you with your tax return and control your financial situation.
It is important that, since there will be a change in your family economy, you manage your money well! Since these changes are designed to help some groups that are still adjusting to inflation.
So, get ready for 2025, which is full of opportunities to save!